HMRC Making Tax Digital (MTD) Downtime for VAT Service – 21 – 23 September 2019

HMRC have announced scheduled maintenance to their  Making Tax Digital (MTD) for VAT service from Saturday 21st September at 10.15  until Monday 23rd September at 16:00.

During these times the MTD service for VAT will be closed and customers and their agents will be unable to:

  • Sign up for Making Tax Digital for VAT,
  • Create an Agent services account (although all other Agent services will be available),
  • Submit VAT returns,
  • View previous submissions and payment details,
  • Set up new or cancel and amend existing direct debits,
  • Review and update any business details,
  • Access the Business Tax Account to view or change details.

Further details can be found on the VAT and ITSA service availability pages:

Company officers jointly and severally liable for VAT penalty

The decision in a recent tax tribunal case reminds us that directors and other company officers may be personally liable for VAT penalties of their company. The recent case involved a penalty for late registration for VAT where the threshold had been exceeded.

Three conditions must be satisfied before the liability for a penalty payable by the company can be imposed on an individual:

  • A penalty must be payable by the company for a deliberate failure.
  • The individual on whom HMRC seek to impose liability must be an “officer” of the company
  • The deliberate failure must be attributable to that officer.

Beware of the HMRC voicemail scam

Beware the HMRC Voicemail Scam

A number of clients have contacted us over the last few days to report they have received automated voicemail messages purporting to be from HMRC.   In one instance the message said the recipient had committed tax evasion.   Fortunately they put the phone down and contacted us.    One of our tax team advised them to ignore any future calls as it was most probably a scam and that if HMRC wanted to contact them they would write.  The automated calls received by our clients seem like the latest HMRC scam.

Typically, these callers leave voicemail messages to encourage victims to give up bank account information or trick them into paying these phoney taxes.     Ignore any instructions to press a number on your keypad or dial a number as you are likely to be put through to a bogus call centre where people can be duped out of hundreds and thousands of pounds.   The scammers seem to particularly pray on the elderly and the vulnerable.  However they are not the only likely victims.

Other Types of Scams

The voicemail scam isn’t the only one currently in use by fraudsters. A variety of methods are being utilised in an attempt to convince victims that they owe HMRC money, or will be subject to an HMRC lawsuit if they don’t settle their non-existent debt.   Do not open attachments or click any links in an email or text message as they may contain malicious software.  Fraudsters may spoof a genuine email address or change the ‘display name’ to make it appear genuine. If you are unsure, forward it to: phising@hmrc.gov.uk and then delete it.

Other scams that you need to be aware of include:

  • Texts
  • Tax rebate emails
  • Phone calls
  • WhatsApp messages
  • Social media messages
  • Refund companies
  • Export clearance process (delivery stop order) emails
  • Emails asking for personal and financial information or upfront payments in exchange for fictitious items.
  • Phishing emails – Here are a few examples to look out for: HMRC Phishing Email Examples

Visit the HMRC guidance page for details of these scams and what you should do if you receive any of them.

How to Protect Yourself

As a government organisation, HMRC is very particular about the ways in which they contact you. They will never, ever use text messages, emails, or social media platforms to request information or inform you of rebates or penalties.

Where it gets a little trickier is when you receive phone calls or voicemails. In such instances, you need to be vigilant, and to educate yourself on the clear signs of fraud.

It’s therefore a good idea to familiarise yourself and your staff with the excellent resource, Take Five to Stop Fraud.

You Can Never Be Too Careful

If you’re ever contacted by HMRC, and you feel uneasy about the correspondence or questions you’re being asked, hang up the phone or do not respond to emails, texts, messages etc.   Contact HMRC or us or Action Fraud.

 

 

 

 

No VAT penalty if you missed the first quarterly MTD deadline

If you pay your VAT quarterly by direct debit the sign-up window has closed for the 7 August (30 June quarter) submission. Do not worry as HMRC have announced that you will not be penalised this time so you may file the old way and come back when the direct debit has been collected to sign up in time to file the next return.

Although HMRC will not penalise you, they will send a letter telling you that you missed the deadline and asking you to take action.

Revised advisory fuel rates from 1 September 2019

COMPANY OWNED VEHICLES

HM Revenue and Customs have announced revised tax free advisory fuel rates from 1 September 2019 which may be paid for business journeys in a car owned by the business.   Rates for the previous quarter are shown in brackets.

Engine size

Petrol

Diesel

LPG

1,400 cc or less

12p (12p)

 

8p (8p)

1,600 cc or less  

10p (10p)

 
1,401 cc to 2,000 cc

14p (15p)

 

 10p (9p)

1,601 cc to 2,000 cc  

11p (12p)

 
Over 2,000 cc

21p (22p)

14p (14p)

 14p (14p)

Hybrid cars are treated as either petrol or diesel cars for this purpose.

Advisory Electricity Rate

The Advisory Electricity Rate for fully electric cars is 4 pence per mile.  Electricity is not a fuel for car fuel benefit purposes.

These above rates may be used in the following circumstances:-

  1. Where employers reimburse for business travel in company cars.
  2. Where employers provide fuel for company cars but employees are required to reimburse the cost of fuel for private use.

INPUT VAT CLAIMS ON MILEAGE PAID FOR COMPANY CARS OR EMPLOYEE OWNED VEHICLES

HM Revenue & Customs will accept the above figures for claiming input VAT on fuel for company cars, provided a VAT receipt is available to cover the cost of the fuel.  They will also accept use of the above rates by the employer when calculating input VAT on the fuel element for employees using their own vehicles and claiming mileage under the tax free approved mileage rates for business travel of 45p for the first 10,000 miles and 25p thereafter.

If you have not already done so, please update any spreadsheets you may use.

If you have any queries regarding the above or require any further information please do not hesitate to contact us.

Company VAT penalty can be a liability of an “officer”

A recent case before the tax tribunal saw the liability for a late VAT registration penalty being passed on to a manager of the company.

HMRC have the power to impose such a penalty on an individual where

(1) there is a penalty payable by the company for a deliberate failure

(2) the individual on whom HMRC seek to impose liability is an “officer” of the company; and

(3) the deliberate failure is attributable to that officer.

Inheritance tax to be simplified

The Office of Tax Simplification (OTS) have undertaken a detailed review of Inheritance Tax (IHT), which is perceived by many as a complicated tax. The government normally takes account of OTS recommendations and their report is likely to lead to future changes to the rules. We will keep you posted as the changes may necessitate amending your will or further planning to pass on your wealth.

There are also numerous misconceptions about how the tax operates, particularly in connection with gifts during someone’s lifetime. One of the proposed changes is to shorten the period for lifetime gifts to be exempt from 7 to 5 years. The OTS also recommended replacing the current £3,000 annual allowance, marriage allowances and the exemption for regular gifts out of income with a £25,000 personal allowance each year.

NO TAX FREE CGT UPLIFT ON DEATH

Although the OTS were tasked with simplifying inheritance tax, they also considered the interaction with CGT as many asset transfers potentially have both CGT and IHT implications. Currently there is no CGT on assets transferred on death and the recipient inherits the asset at its market value.

It has been suggested that the capital gains tax uplift on death distorts decision making relating to assets that benefit from an exemption from Inheritance Tax. Where an individual holds such an asset that has risen in value, and is considering transferring it during their life, they are often advised to retain it until death rather than giving it away during lifetime, because of the tax benefits.

Where a business is retained until death, any potential capital gains are wiped out and there is no Inheritance Tax to pay. This could lead to an asset being retained rather than being transferred to the next generation at the time that is right for the business.

We will again monitor the progress of this proposed change as it is likely to have significant implications on family business succession planning.

IHT RELIEF FOR BUSINESSES AND FARMS

There is currently a very generous 100% relief from inheritance tax for passing on businesses and farm land during lifetime and on death. The rationale for Business Property Relief (BPR) and Agricultural Property Relief (APR) is to enable businesses to be passed on without the need to sell off assets to pay the IHT due on the transfer.

Currently if a business is wholly or mainly for the purpose of investment, then it will not be eligible for BPR. This is not always straightforward to determine.  Many estates include both trading and non-trading business assets, and establishing whether this test is met can be difficult to establish. The ‘wholly or mainly’ test is generally considered to be a greater than 50% test and the OTS are suggesting that the test should be aligned with the much stricter 80:20 test that applies for CGT gift of business asset holdover and entrepreneurs’ relief. If introduced many more business transfers would be liable to IHT.

On the positive side the OTS have recommended that IHT business property relief should be extended to include Furnished Holiday Lettings aligning the tax treatment with that of Income Tax and CGT where they are treated as “trading” providing that certain conditions are met.

Vacancy for Accounts Assistant at Saint & Co, Penrith

Due to continued expansion, Saint & Co (Penrith Office) are looking for a full-time enthusiastic individual to join our rapidly growing accounts team. The role will involve accounts production (both limited and non-limited) ready for review by senior staff and / or bookkeeping / management accounts preparation. Experience is essential. Xero / Sage / Quick Books experience is preferred. A knowledge of VAT would be an advantage. Further training will be given.

We operate a flexi-time system and applicants seeking a part-time role will be considered.

Please submit your CV by Monday 2nd September 2019 to

Helen Little (helen.little@saint.co.uk) or

Saint & Co., 4 Mason Court, Gillan Way, Penrith 40 Business Park, Penrith, CA11 9GR

 

Capital Gains Tax (CGT) Changes

i.     PRIVATE RESIDENCE RELIEF 

Draft legislation to be included in the next Finance Bill will make important changes to the calculation of CGT private residence relief. As announced in the Autumn 2018 Budget, there will be a reduction in the final period exemption to just 9 months and stricter conditions for letting relief to apply.

Currently where a property has been the taxpayer’s main residence, the last 18 months of ownership counts as a period of deemed occupation. This will be reduced to just 9 months for disposals on or after 6 April 2020. It is understood that this is being introduced to counteract “second home flipping” allegedly used by MPs when they sell their London residences.

ii     CGT LETTING RELIEF RESTRICTION

Currently letting relief provides up to a £40,000 deduction in computing the capital gain on the disposal of a property that was at some time the taxpayer’s main residence. The relief is the lessor of £40,000, the gain attributable to the let period, and the amount of private residence relief. For a couple this could potentially exempt up to £80,000 of the gain from CGT.

The draft legislation will limit letting relief to those situations where the owner remains in shared occupancy with the tenant, i.e. has lodgers living in the house.

If you were hoping to take advantage of letting relief on the sale of a property, you might want to consider disposing of the property before 6 April 2020 to take advantage of the current rules.   Contact us for advice in this area as we can estimate the additional tax that might be due following the withdrawal of this generous relief.

We have already advised a client and saved them in excess of £24,000 by advising to sell before 6 April 2020.